Cover story – All systems go?

Cover story - All systems go?

The scale of the Year 2000 problem threatens to be so large thatconsultancies are forming alliances in order to cope with the anticipatedsurge in demand. And, says Cosima Duggal, some firms are already turningpotential clients away.

Pensions are being paid out early, tins of corned beef and brand new films are being thrown into the rubbish bin, and all because computer systems are reading the date codes on barcodes as the year 1900, instead of the year 2000.

The year 2000 problem is here. And there is already plenty of work for consultants to do. In fact, they are anticipating having enough work to carry on well into the next century.

“A major concern is that consulting resources to help in this area are overloaded and that consultancies are not looking for any more work,” says Robin Guenier, executive director of Taskforce 2000 – set up to ensure business awareness about the problems companies will face in the year 2000. “This might become a major problem because there will be a shortage of programmers and prices will go up.”

In fact, some consultancies are even beginning to turn away year 2000 work now.

“I know of one organisation that is predicting it will close its books in October because it is already doing 20 assessments and conversions through the year 2000,” says Malcolm Stirling, director of Millennium services at KPMG.

Jackie Olivier, director of TransMillennium services at Cap Gemini, says that once the volume of programming gets underway in the next couple of years, Cap Gemini will stop working on impact analysis and business stategy for new businesses and concentrate on its older customers.

Coopers & Lybrand also believes that the problem will be greatest when consultancies start converting code.

“It will be around the back end of 1997, when there are no conversion facilities, that things are going to go bad from a competitive point of view for consultancies,” says Chris La Nice, head of Year 2000 services at Coopers & Lybrand. “I’ve heard that IBM in Canada is setting up a finite capacity so that when it hits it, it won’t take on any more work.”

Businesses which have not planned ahead will be left with the Year 2000 consultancy services and programmers that are more expensive and not up-to-scratch.

“Firms with a really good offering will be booked up first and you’ll be left with Johnny-Come-Lately,” says Cap Gemini’s Olivier. “I already know how many customers I want to work with this year and next year.

In the future there is no doubt that we will be turning away work.”

“Sadly, I would think there is going to be an enormous pressure for resources,” adds Stirling. “Consultancies will not have the resources and won’t be able to meet the demands.”

The fact that consultancies are already turning away work is surprising, says Olivier. And Stirling thinks that this is not just because their order books are full: they are refusing to take on projects where they think they might fail.

“I’ve come across some that are turning work away because there are some very difficult solutions to solve,” says Stirling. “At the moment, in the prediction that order books will become full, consultancies are choosing particular projects. They are cherry picking projects, the best projects for them, where they can get the best results.”

He adds: “Those with difficult-to-fix systems are going to find it very hard to get assistance because there will be a concentration of firms picking the low hanging fruit first.”

According to Coopers & Lybrand, if businesses all start jumping on the bandwagon, consultancies will not be able to cope with the demand. “We are stretched like hell and if business suddenly doubles, we would have to turn work away,” says La Nice. “From our point of view there is a pure resourcing restraint. In theory, we will call in a lot of our consultants.”

This staffing problem is something most consultancies are having to deal with. The PA Consulting and Ernst & Young approach is to recruit additional people to cater for the anticipated surge in Year 2000 work.

“We are recruiting heavily and should be able to run 30 to 40 programmes in parallel at the peak of Year 2000 work,” says Gary Miles, who is responsible for Millennium services at PA Consulting.

Nick Land, senior partner at Ernst &Young, believes some firms will have to give up other projects in order to concentrate on Year 2000 work.

“We are recruiting at the rate that the job market allows. We would be hard pressed to recruit more,” Land says.

The scale of the problem is so large that consultancies are forming global alliances and partnerships in order to avoid a shortage of people and capacity. Even the mighty Andersen Consulting is forging alliances.

“We are taking on a number of local and smaller consultancies and large players,” says Iain Lopata, associate partner responsible for Year 2000 work at Andersen Consulting. “Right now we have 30 Year 2000 projects in progress and the number is growing rapidly.”

Much of the work for Year 2000 will be code conversion and consultancies will need to get hold of programmers fast, both those dealing with legacy systems and software packages.

“Consultancies are going to need a lot of resources, either from a technology point of view, a large number of people, or a lot of Indian programmers,” Coopers & Lybrand’s La Nice says. “Software gets out-of-date so quickly, and now there’s a new breed of tools which have been built specifically for Year 2000 which are better than the bastardised tools used now.”

The route widely chosen by consultancies to cure the problem of under-resourcing is that of off-shore connections with large programming firms based mainly in Asia and the Far East.

The idea of off-shore resourcing is to bring in cheaper resources to convert the millions of lines of code needed for Millennium compliance.

PA Consulting, Coopers & Lybrand, Deloitte & Touche and KPMG are all taking this route.

PA estimates that it will use 1,200 software engineers through its alliance with Infosys and tap into its other resources in the Netherlands, as well as its own consultancy and IT division.

“We will be doing work off-shore because it minimises cost to the client and that will include 1,200 software engineers and around 50 experienced project managers,” says Jason Hill of PA Consulting.

KPMG is not putting all its eggs in one basket and concentrating on Year 2000 work alone. It is implementing SAP programmes, where Year 2000 is just one of the reasons for using client/server systems, and has set up links with off-shore firms.

“We have links to programmers and have a long established relationship with PCL Mindware in India,” says Stirling. “There are a lot of off-shore companies in India and the Philippines like Tata and Konbay.”

Off-shore does not always mean the Far East. Deloitte & Touche does not rule out getting together with any other Big Six firm, and is also looking at firms in the US.

“There are a number of companies in the US that specialise in legacy systems maintenance and with their tools they are in an ideal position,” says Beryl Overton, director of Praxis, Deloitte & Touche’s software engineering company, and head of the Deloitte & Touche’s taskforce. “We are doing a lot of work in the US, working with clients’ own staff and bolstering up the projects with our own resources.”

Coopers & Lybrand has the advantage of its own software factory, where it will concentrate on scanning and parsing code to assess the impact of Year 2000 issues.

“The key thing is the evolution, which is the project management, risk management and change management. The actual handling of code conversion will be done by someone like Hoskyns,” says La Nice.

Building a Year 2000 capability from scratch is impractical, in terms of time and the investment needed, as well as what would happen to it when Year 2000 work is over, according to Andersen’s Lopata. This is one of the reasons why the firm has been forming alliances.

But Andersen also has a software centre in the Philippines, which it is using to change code remotely. It also has teams based in the Americas, Europe and Asia Pacific.

“We looked at the possibility of setting up a Year 2000 capability, but with the scale of demand that wouldn’t be practical,” says Lopata. “In our solution centre in the Philippines, high volume conversion of code can be done in a factory type of environment. When we change codes we have to go in and fix systems and the centre can do that very productively.”

Cap Gemini is one of the few consultancies not taking the off-shore line.

Instead, it is opting for the tools approach and providing both the project management and systems conversion.

Olivier says: “You can either throw people or tools at it and we are using tools – Andersen is employing the Philippines!” She adds: “The tools area is a real nightmare and everyone says they have automated tools that will change code automatically, but there are probably only a handful that are really automated: we happen to have one.”

Andersen’s Lopata highlights the need for caution when looking at Year 2000 issues. He believes there has been a lot of misunderstanding in how to deal with date change issues, and that Year 2000 issues should have been incorporated into businesses’ longer-term change management goals. He advocates a holistic approach as being better for the business in the long-run.

“What is unfortunate is that people have seen this as a problem that needs to be looked at by analysing millions of lines of code,” he says.

“We are finding that people are able to correct the existing systems by working towards longer-term goals.”

While PA Consulting, Andersen, and Cap Gemini have fixed, strategic approaches, Price Waterhouse has waited before pouring its money and resources into Year 2000 projects.

This is an unusual tactic, since much research indicates that starting any later than 1996 will be disastrous for firms. The worry is that this could also bring down the whole industry sector.

“We recognise that our position is somewhat later than our competitors, and as a result are looking for partnerships with third parties,” says Cliff Fitzpatrick, PW senior manager, responsible for Year 2000 services.

“We are looking to provide a full lifecycle capacity for Year 2000, but if we decide that this is not viable, then we will consider providing a more limited service.”

The firm is currently working together with Taskforce 2000 and SAP on the implications of single currency and Year 2000 issues on systems.

It plans to tackle both issues in its Year 2000 provision, by incorporating dual currency reporting measures into the business assessments, plans and implementation.

The firm is following the same approach as KPMG, Deloitte & Touche and Coopers & Lybrand: outsourcing the code conversion and concentrating on project management, as well as acting as brokers between clients and software programmers.

“I want to sell experience and knowledge to a wide range of our clients,” says KPMG’s Stirling. “There will be a strong demand for skills from a business planning perspective.”

Each firm has set up a taskforce to deal with Year 2000 issues, mainly assessing the impact of new systems on firms’ competitive advantage, working on IT inventory systems, and providing advice and information to clients.

Overall their objectives are the same: to change manage, risk manage and project manage the businesses and determine the way they should be set up.

“It’s more of a management and a logistics problem, and that’s something that our management consultancy does all the time,” says Deloitte & Touche’s Overton.

The only risk that could come out of this business is that once firms have outsourced their systems to the off-shore competition, they may decide to keep them there for the next millennium.

Price Waterhouse

Business analysis, including an impact analysis and finding out what and where the problem is; Planning which systems applications need to be fixed or replaced. This will be divided into those which are business critical and those which do not include core processes; Fixing and replacing code; Testing and running the system; Overall project management of the programme.

KPMG

The firm is offering the resources and capacity to help people through the four phases in achieving millennium compliance.

– Stage one – ideally completed in 1996

Business and systems assessment: to find out how big the problem is through piloting and simulation systems; to find out the time needed to fix or replace systems.

– Stage two – ideally completed in 1996

Putting together a programme plan

Sequencing, by prioritising business functions and determining which are:

i. more vital to business

ii. which are going to fail first

iii. mapping interdependence between functions to see what the ripple effect will be Build programme plan

– Stage three-to start in 1997

Implement plan: follow a non linear plan with several streams working in parallel.

– Stage four – to finish end 1998

Test plan and make corrections

– Stage five – 1998-1999

Run systems testing the software throughout 1999.

Coopers & Lybrand

– Pre-stage one – making sure clients are aware of the problems involved in Year 2000 work.

– Stage one

Impact assessment which will take between three and six months.

i. Productivity analysis

ii. Inventory of architecture

– Stage two – strategic formulation and planning

– Stage three – evolution and implementation of defined business strategy and change.

i. Project management, risk and change management

– Stage four – final stage code conversion together with other partners

i. Conversion

ii. Replacement

Ernst & Young

– Stage one – complete review and audit of the business and systems, including risk and impact analysis.

i. Looking at where companies want to be in the Year 2000 and where they are now

ii. Prepare an inventory of hardware and software assets and include all areas of the business that will be impacted

– Stage two – developing a plan to achieve Year 2000 compliance

– Stage three – undertake a tightly managed programme of system conversion, enhancement and replacement. Ernst & Young will use an automated conversion tool and work together with its offshore software partner.

Deloitte & Touche

– Stage one – assessment of business issues, priorities and IT inventory

– Stage two – planning

– Stage three – form alliances with partners to convert code

Andersen Consulting

– Pre-stage one – educate clients about the issues and best approaches for dealing with Year 2000 issues

– Stage one – assessment and information gathering exercise

– Stage two – planning, using all the information and making an internal plan for Year 2000 problems including pilots

– Stage three – project management and implementation of the project

i. Fixing applications

ii. Replacement or re-writing.

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